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Economics: Chapter 2: Economic Systems and Decision Making

Economics: Chapter 2: Economic Systems and Decision Making. Chapter 2: Economic Systems and Decision Making. An Economic System is a set of rules that govern WHAT goods and services to produce, HOW to produce them, and for WHOM they are produced. Chapter 2: Economic Systems and Decision Making.

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Economics: Chapter 2: Economic Systems and Decision Making

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  1. Economics: Chapter 2:Economic Systems and Decision Making

  2. Chapter 2: Economic Systems and Decision Making • An Economic System is a set of rules that govern WHAT goods and services to produce, HOW to produce them, and for WHOM they are produced.

  3. Chapter 2: Economic Systems and Decision Making Economic Systems

  4. Chapter 2: Economic Systems and Decision Making

  5. Chapter 2: Economic Systems and Decision Making

  6. Chapter 2: Economic Systems and Decision Making Evaluating Economic Performance • The social and economic goals of U.S. society includes: • Economic Freedom • Economic Efficiency • Economic Equity • Economic Security • Full Employment • Price Stability • Economic Growth

  7. Chapter 2: Economic Systems and Decision Making • When goals conflict, society evaluates the costs and benefits of each in order to promote one goal over another; many election issues reflect these conflicts and choices. • People’s goals are likely to change in the future, as our economy evolves.

  8. Chapter 2: Economic Systems and Decision Making Capitalism and Economic Freedom • Capitalism is a competitive economic system in which private citizens own the factors of production.

  9. Chapter 2: Economic Systems and Decision Making 5 Characteristics of Capitalism (Free Enterprise) System • 1. Economic Freedom • 2. Voluntary Exchange • 3. Private Property Rights • 4. Profit Motive • 5. Competition

  10. Chapter 2: Economic Systems and Decision Making • The entrepreneur is the individual who organizes land, capital, and labor for production in hopes of earning a profit. ** The profit motive is the driving force in capitalism. • In Capitalism, firms are in business to make a profit. To do this they must offer products consumers want at competitive prices.

  11. Chapter 2: Economic Systems and Decision Making • Consumer Sovereignty states that the consumer is the one who decides WHAT goods and services to produce. • The national government plays the role of protector, provider, and consumer, regulator, and promoter of economic goals. • The U.S. has a mixed economy or a modified private enterprise economy, in which its citizens carry on their economic affairs freely but are subject to some government intervention and regulation.

  12. Chapter 2: Economic Systems and Decision Making The End

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